29.11.17

Nigeria raises $3billion at international capital market — Adeosun

The Minister of Finance, Mrs Kemi Adeosun says Nigeria has raised three billion dollars at the international capital market.
She made this known in a statement issued by Mr Oluyinka Akintunde,
the Special Adviser, Media and Communications on Wednesday in Abuja.
She said the Notes comprised a 1.5 billion dollars 10-year series and a 1.5 billion dollars 30-year series.
“The 10-year series will bear interest at a rate of 6.5 per cent,
while the 30-year series will bear interest at a rate of 7.625 per cent.
“By raising 1.5 billion dollars of 30-year notes, Nigeria has
emulated a number of our international contemporaries, including Brazil,
South Africa, Argentina and Egypt to issue long dated debt as the basis
for long term infrastructure financing.

“It will also establish a benchmark for the private sector to extend the tenure of its own financing.
“This is critical to delivering an environment within which both the
government and the domestic private sector can rapidly enhance its
ability to fund investments in infrastructure projects and broader
project financing.
“The full 1.5 billion dollars proceeds of the 30 year notes are allocated to 2017 capital projects.’’
According to her, the 30-year notes will benefit Nigeria because it
demonstrates strong investor confidence in the Nigerian economy and
growth story, while providing the long term funding required to finance
infrastructure projects at affordable interest rates.
She said the provision of infrastructure was critical to the long
term sustainability of the nation’s economic growth and would provide a
more productive economy for current and future generations of Nigerians.
They also provide a benchmark for longer term private sector funding, she added.
She said the proceeds would be split between the 2017 budget capital
projects (2.5 billion dollars) and re-financing some of the nation’s
short term domestic debt (500 million dollars).
Capital projects under the 2017 budget include roads, rail, power and
housing projects which are crucial to the delivery of the economic
recovery and growth plan.
Adeosun said Nigeria raised a further 1.5 billion dollars of 10 year
notes, and presently had a full ‘basket’ of international debt notes,
including five-year, 10-year, 15-year and 30-year issuances trading in
the market.
She said this provides international investors with the full range of tradable options in Nigeria’s international debt.
According to her, of the 1.5 billion dollars of 10 year notes, one
billion dollars will be allocated to the 2017 capital budget under the
2.5 billion dollars approval from the National Assembly.
She said the balance of 500 million dollars allocated to refinancing
of domestic debt was in line with the nation’s strategy to re-balance
its domestic/international debt profile.
She, however, said the full amount of 5.5 billion dollars approved by
the National Assembly was not raised because it was approved in two
separate resolutions.
“One for 2.5 billion dollars to fund capital expenditure in the 2017
budget, and one to re-finance existing domestic debt of three billion
dollars, which is not time bound.
“Our intention for this issuance was to meet our short term requirement to fund 2.5 billion dollars for the 2017 budget.
“Following significant investor interest of over 11 billion dollars,
we brought forward a further 500 million dollars of funding toward the
refinancing of existing domestic debt and will assess options for
concluding the refinancing process in the New Year.
“Restricting this issuance to three billion dollars also enabled us
to optimise the price of the notes, which at 6.5 per cent (10-year) and
7.625 per cent (30-year) are significant improvements to our existing
portfolio.’’
On the issue of re-balancing the nation’s debt portfolio and
increasing international borrowing, she said Nigeria had over the last
five years, been overly focused on domestic debt, which was short term
and high cost.
“This means that we pay too much and have to regularly refinance
existing debts rather than having the security of longer term
instruments.

“You can see this clearly reflected in our debt service to revenue
ratio, which at 45 per cent as of Third Quarter (Q3) 2017, is higher
than we would like.
“Having returned the economy to growth in 2017, and secured a stable
and liquid exchange rate regime, we are focused on addressing this issue
by diversifying our sources of debt to achieve an optimal balance.
“So far, we have moved our domestic/international debt ratio from
18:82 to 23:77 and we expect this to improve to circa 27:73 by year end,
with an ultimate target of 40:60.
“This will deliver significant savings in our debt service costs,
with provisional estimates demonstrating savings of up to N91 billion in
2018 alone.’’